Tag: exemption

Exemption is the way you protect your assets in a bankruptcy. The California homestead exemption is one example of how debtors can protect their stuff in a Chapter 7 bankruptcy.

California bankruptcy exemptions can save your house.

California Homestead Exemption

California Homestead Exemption

Chapter 7 bankruptcy is liquidation; the bankruptcy trustee can take your stuff. They don’t take the shirt off your back, but at some point they draw the line regarding what you can keep. These are the bankruptcy exemptions, and each state has its own. The California exemptions include a way to protect some home equity. This is the California homestead exemption.

There are two sets of California bankruptcy exemptions. Bankruptcy attorneys call these the 703s and 704s. The California homestead exemption is found in the 704s, at California Code of Civil Procedure 704.730. There isn’t just one homestead exemption in California, but three.

The Three Homestead Exemptions in California

The California homestead exemption can save your house.
Don’t risk losing your house in Chapter 7. Talk to a experienced bankruptcy attorney about the bankruptcy exemptions and homestead exemption in California.

Firstly, there’s the bankruptcy exemption that a single homeowner gets. This is in subsection (a)(1). In 2018, a single person who lives in a house gets to protect $75,000 of home equity under the California exemptions.

Secondly, there’s a higher California homestead exemption for a married person’s residence. This is in (a)(2). The California homestead exemption for a married person is $100,000.

Finally, if you can tick one of three boxes, you get the superduper $175,000 homestead exemption in California’s bankruptcy exemptions. To level-up and qualify for this, you have to either be:

  • 65 years old;
  • have a disability that prevents gainful employment; or,
  • 55 years old, and make below a certain income level that changes from time to time

This may seem simple, but what is “disabled?” What is “as a result of?” What is the income level, and which time period is measured? You’ll want to speak to a qualified bankruptcy attorney in your area. But in the right circumstances, someone filing consumer bankruptcy can protect a lot more house equity under this third option.

Spouses Sometimes Count

A final note: a good thing about, in particular, the $175,000 California homestead exemption is that it extends to the spouse of the person filing Chapter 7. So if the debtor is, say, 63 years old, but their husband is 67 but really doesn’t want to file bankruptcy, the 63 year old who does file Chapter 7 bankruptcy gets the $175,000 homestead exemption in California anyway.

Be careful in Chapter 7 bankruptcy.  It’s not always the best type of bankruptcies.

Learn the differences between Chapter 7 bankruptcy vs 11 vs 13.

 

 

You really should talk to a qualified Los Angeles bankruptcy lawyer, as you get what you pay for, and it’s not worth risking your home.